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14 June 2024 | FXGT.com

Yen Falls to One-Month Low After BoJ Maintains Bond-Buying Pace

  • Yen Falls After BOJ Decision: The Japanese Yen remains under selling pressure on Friday as markets assess the Bank of Japan’s (BoJ) monetary policy announcements. After the announcement on Friday morning, the yen fell to a one-month low as the BoJ maintained its current bond-buying pace and deferred tapering plans, leading to a continuation of its recent downtrend.
  • BOJ Maintains Policy Rate and Bond Purchases: As expected, the BOJ kept its policy rate at 0% for the second consecutive meeting in June. Many had expected the bank to outline a pathway for tapering the amount of government bonds being purchased per month, but this was postponed to the next meeting.
  • Future Reduction Plans and Market Stability: Governor Kazuo Ueda stressed the importance of reducing Japanese government bonds purchases gradually while maintaining flexibility to ensure bond market stability. The BOJ plans to decide on a specific reduction plan for the next 1-2 years at the July meeting.
  • US Fed Outlook: The number of Americans filing new claims for unemployment benefits rose to a 10-month high last week, while producer prices unexpectedly fell in May. Despite softer-than-expected inflation data, the Fed’s revised dot plot reduced rate-cut expectations this year from three to one. Investors are considering the implications of the Fed’s tempered rate-cut views, with the dollar hovering near a one-month high.
  • US Inflation Data Impact: The Fed is likely to remain patient, waiting for sustained progress on inflation, and may start its monetary easing campaign in December. Traders, influenced by recent inflation reports, are pricing in 50 basis points of cuts this year, with a 68% probability of a September rate cut.
  • Upcoming US Economic Data: The US economic calendar will feature Export Price Index and Import Price Index data for May. Later in the session, the University of Michigan will release the preliminary Consumer Sentiment Index for June.
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